Learn forex market by knowing that a large percentage, almost 80 to 90% of the foreign exchange transactions taking place in the market are merely speculative. What does this mean? It means that whoever bought the currency actually had no plan to take delivery of the said currency in the end. All that took place was a speculation on that currency’s movement. Hedge funds engage in aggressive currency speculation, and have been doing so since 1996. Billions of dollars of equity are controlled by them. If you want to learn forex market, you must know it is also used by investment management firms to bring about transactions in foreign securities. There are also retail traders in the market, who show their participation directly or indirectly through banks or brokers. They are mostly controlled and regulated by the CFTC and the NFA, yet sometimes they are related to foreign exchange scams.
Want to learn forex market further? In the United Kingdom, almost 14% of the currency transfers / payments, are made through foreign exchange companies. These companies give the benefit of offering better exchange rates, or even cheaper payments, than offered by the customer’s bank. Their services, too, are high-value in nature. In the forex market, the most frequently traded currencies are the United States dollar, the Euro, the Japanese yen, the Pound sterling, the Swiss franc, the Australian dollar, the Canadian dollar, the Swedish krona, the Hong Kong dollar, the Norwegian krone, the New Zealand dollar, the Mexican peso, the Singapore dollar, and the South Korean won.
When it comes to the trade of foreign exchange, if you want to learn forex market, there is not much cross-border regulation. Currency markets are characterized by their over-the-counter nature, so in the inter-connected marketplaces, different currencies instruments are traded. What does this mean? Well, there’s no single exchange rate as such, rather there are some different rates, or prices, depending on factors like which market maker or bank is trading, and also in which location. London is taken to be the most dominant city in the forex market, so a particular currencyâ€™s quoted price is mostly always the London market price.
If you want to learn forex market, there are a number of issues to be taken into account, when it comes to the forex marketplace. Firstly, the trade in the euro has increased considerably, since its creation in the month of January, in 1999. Also, perhaps the forex market will not be focusing on the dollar for very long. Also, forex rates are decided by the governments. One must know about international parity conditions, balance of payments model, asset market model. There are many current events mixing together, there are supply and demand factors to be taken into account, and the foreign exchange market takes into account all of this. Supply and demand for a currency are influenced by factors like economic factors (economic policy through government agencies and central banks, and economic conditions through economic reports and other indicators), political conditions (international, regional and internal), and market psychology (trader perceptions, etc.)
Today, there is an increase in electronic trading in the foreign exchange market, and what is becoming very common is algorithmic trading. There are certain things an algorithmic trader needs to take into account, one of these is potential fraud on the part of the broker. The weekly algorithm should check up on the transaction errors, if they are equal in proportion to the trader losing money compared to when he would have made money. Many people deal with the risk of foreign exchange by engaging in a forward transaction. No money is exchanged till a future date is agreed upon. On this date, the transaction occurs, no matter what the market rates are. This is how you can learn forex market.